The government-commissioned review of modern working practices by Matthew Taylor calls for legislative change to help determine employment status more easily and recommends enhancing rights for workers.
Taylor acknowledges the confusion created by the current category of workers, made up of bona fide employees and so-called limb (b) workers who are contracted to perform work personally but are not carrying on a business undertaking. Instead, he suggests calling the latter category dependent contractors and introducing a new statutory test and free tribunal hearings to distinguish more easily between employees, workers, and genuinely self-employed individuals.
Taylor advocates extending dependent contractors’ rights beyond their current entitlements to national minimum wage and holiday pay to encompass statutory sick pay from day one at work regardless of income level, a written statement of particulars, the choice to receive premium pay instead of taking holiday, and lower thresholds for trade union representation for employees and workers. If the government seeks to implement the proposals, they are likely to lead to detailed consultation given that some of these rights go beyond what is currently afforded to employees and paying rolled up holiday in this way has previously been found to be unlawful by the courts. Although not mentioned in the report, dependent contractors would need to be automatically enrolled into a pension scheme with employer contributions if they meet the relevant earning thresholds and included in gender pay gap calculations alongside employees.
Taylor also recommends new rights for zero-hours workers and agency workers designed to reduce income instability and a shake-up of the rules on wages. For example, he suggests that dependent contractors working for platform-based organisations, like Uber, should receive piece rates based on output, provided that the organisation can show that an average individual working averagely hard would be capable of earning 120% of the national minimum wage but that they may earn less than the national minimum wage if they choose to work when there is little demand, provided that the organisation informs them in advance of the pay they are likely to receive using real-time data.
There will be no immediate changes but the government has pledged to seriously consider the recommendations in the report. In the meantime, employers may want to consider auditing their workforces and budgeting for the potential additional costs of engaging workers in future.
Kate Hurn is associate at law firm Bird and Bird